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Driving Profitable Growth by Aligning Strategy and Operations

LSU won the 2019 National Championship by implementing a lethal spread offense, resulting in a historic 15-0 season. Why have some spread programs succeeded while others have failed? Because a successful spread playbook requires an equally athletic defense to complement its high-powered attack—alignment between offensive and defensive strategies is critical. 
 
As in business, how you grow (score points) and maintain profitability (defend against scoring) requires similar game-planning and deliberate alignment. 

Getting this alignment right often involves:

  1. Proactively managing all customer interactions and mitigating or eliminating ‘bad interactions'
  2. Controlling the ‘bad complexity’ often infused in growth, which drives operating costs to rise faster than revenue
  3. Better understanding customer expectations and managing through alignment of marketing, sales, customer service, operations support, and transactions

At WP&C, we have found that taking a step back to check for and fix this misalignment can be a strategic way to unlock value for management teams. Learn about the powerful business transformation outcomes we've produced in the three case studies below.

PROJECT 1: Doubled profits by aligning portfolio operations with go-to-market strategy for a wine distributor
A food and drink company recognized that its wine distribution subsidiary needed a new strategy for growth, given its stagnant sales and declining profitability. Its “business as usual” approach had led to a cluttered stock of available wines, along with unfocused front-office and product management organizations. WP&C assessed the current product portfolio and alignment with high growth channels. We found that 25% of SKUs accounted for 90% of volume and more than 200% of profits. It was “overweight” in the stable grocery channel but was barely participating in the higher growth, higher margin restaurant and hotel channel.

We worked with the business to develop separate “fit-for-purpose" product ranges for each channel. The grocery channel would be served by a tight offering of well-priced and widely enjoyed wines, while the restaurant and hotel channel would be served by a broader range of wines at various price points to meet the diverse needs of buyers. We then restructured the sales organization and processes to execute on the strategy. This resulted in significant revenue growth (2x) and an increase in operating profit margin from 4% to 8%.

PROJECT 2: Increased free cash flow by $500M at a global communications company by identifying simplification roadmap
A consumer communications company was experiencing operating cost growth at a faster rate than revenue growth. We quantified how excessive promotions, offers, and other growth campaigns were driving enormous variation and adding cost to operations. We analyzed millions of transactions and statistically captured the impact on operating cost. We then developed a simplification roadmap to better align growth and operating strategy, streamlined transaction processing, and tightened up channel strategies. This effort yielded over 7% EBITDA improvement.

PROJECT 3: Simplified E2E operating model in outdoor consumer apparel brand
A technology-based consumer apparel company was struggling with cost position given declining volumes in its legacy outdoor/extreme-environment fabric business. We helped identify multiple duplicate business models and eliminate other complexity drivers due to an overfocus on individual outdoor brand partners. These duplicative business models consumed significant supply chain/production indirect labor, drove material components, and compounded processing costs while raising WIP and inventory opportunity costs. We successfully developed and executed operating model simplification focused on rapidly reducing SG&A by 25%. This project provided immediate transformation funding through cash flow improvements for phase II structural operating model simplification and supported growth initiatives in accelerated new product launches and loyalty brand building.

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